Big-bank confidence dented by social banking

Nearly three-quarters (74 per cent) of Britons said they would consider borrowing or lending through a social lending community rather than their high-street bank.

Respondents to a survey by research house Social Futures Observatory (SRO) said they were wary of big banks' motives for lending, with 61 per cent of respondents believing the main aim of their bank was "to make money for themselves".

Zopa is a UK peer-to-peer lending and borrowing site, putting people who want to lend in touch with those who want to borrow.

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The SRO research found 81 per cent of lenders felt Zopa offers "significant control", compared to only four per cent who felt that way about mainstream financial services.

Zopa borrowers echoed this view, with 70 per cent of borrowers saying Zopa offered "significant control", compared to only one per cent for mainstream banks.

Interest rates also play a part with nearly eight out of 10 people who borrowed on Zopa saying the social lending site secures a lower rate of interest than is offered in the high street.

However, social lending is not without its problems. As curiosity in the concept of social lending mounts, the Zopa site suffered a minor crash on the evening of 23 November 2006.

Dave Nicholson, co-fouder of Zopa, told silicon.com the site went down for around four minutes at 18:20 following a BBC report on Zopa which drove extra traffic to the site.

The site received about four times the total daily number of visitors within the space of about 10 minutes, causing it to go offline, Nicholson added.

Social lending uses the age-old concept of borrowing and lending money person-to-person, which in the past has normally taken place in private between friends and family.

Sites like Zopa take social lending into the public domain, cutting out the middleman and stopping the bank manager getting fat at everyone else's expense.

Zopa was set up by some of the brains behind Egg, the UK bank which wrote the book on online banking, and currently has 105,000 members in the UK.